One of the first questions Canadian business owners ask when they need capital is simple: "Is my credit score good enough?" The honest answer is that it depends entirely on where you apply. The score you need for a big-bank loan is very different from what you need for alternative financing, and understanding that difference can save you from unnecessary rejections.
Let us start with the traditional route. Canadian banks and credit unions are the strictest lenders. For a standard small business loan, most want to see a personal credit score of 680 or higher, along with strong business financials, time in business, and often collateral. If your score is in that range and you can wait a few weeks for approval, a bank loan offers the lowest rates available.
Government-backed options, such as loans made through the Canada Small Business Financing Program, also tend to favour solid credit because they are administered by the same banks. They can be excellent for well-qualified borrowers but involve more paperwork and longer timelines.
Here is the part many owners do not realize: a large and growing segment of Canadian lenders will fund your business with a much lower score. Alternative lenders that offer merchant cash advances and short-term business loans routinely approve applicants with FICO scores as low as 400. Instead of leading with your credit score, they evaluate your monthly revenue, the consistency of your bank deposits, and how long you have been operating. Our complete guide to merchant cash advances in Canada explains how this revenue-based approval works.
This means that even if your score is in the 500s, low 600s, or below, you likely still have real funding options. We cover these in depth in our article on bad credit business loans in Canada, which explains which products accept low scores and how to qualify.
So what actually matters to an alternative lender if not your score? Three things carry the most weight. First, monthly revenue ā most look for at least $10,000. Second, healthy bank statements showing consistent deposits, positive average balances, and few overdrafts or NSF charges. Third, time in business, typically a minimum of a few months. Meet these, and a weak credit score is rarely a dealbreaker.
There are still smart steps you can take to strengthen any application. Keep your business banking clean, avoid overdrafts, maintain steady deposits, and have three to six months of recent statements ready. Apply for an amount your revenue can comfortably support, and be prepared to briefly explain any past credit issues. If your credit is very low, you may want to explore the full range of alternative financing options for Canadian businesses to find the best fit.
It is also worth remembering that funding can help rebuild your credit. Responsibly repaying an advance or short-term loan demonstrates reliability and can improve your financial profile over time, opening the door to better rates in the future.
The bottom line: there is no single credit score you "need" for business funding in Canada. Banks want 680 or higher, but alternative lenders can approve you with a score as low as 400 based on your business performance. The key is applying to the right lender for your situation.